Software Developer Costs: How Much Does it Cost to Hire a Software Developer in 2023

The industry of showcasing steady growth. In 2021, the global market of software development was valued at USD 24.46 billion and is predicted to hit $85.9 billion to 2028.

Accordingly, the demand for software developers is unquestionably soaring.

In this article, we’re unveiling the cost of hiring software developers. You will learn how much does it cost to hire a programmer, the factors that influence cost of software engineering, and how to arbitrate the budget for hiring software developers and engineers. So, how must does it cost to hire a software developer? Read to learn

The matter of price is crucial for businesses looking to hire software developers to build a digital product. However, there’s no definitive answer on the price of finding and hiring software developers. Here are the top factors that impact the formation of software engineering costs. 

Skills and Experience 

Based on experience, developers can be divided into junior, middle, and senior. While the yearly cost estimate for a junior developer is $70,000, senior developers will command nearly $120,000. However, the experience of a developer is not necessarily defined by years in the industry. Other factors such as the number of successfully delivered projects and industry-specific skillset play a role too. 

Technology

By technology we mean a set of programming languages, tools, and frameworks a developer will require to build software. Some technologies may be more niche or specialized, require more wits, and invariably affect the final cost. 

For example, hiring developers for emerging technologies like AI often comes at a premium due to the scarcity of skilled professionals in these areas. On the other hand, hiring developers for more mature or widely used technologies like Javascript, React, Angular, and Python might be relatively more affordable due to a larger pool of available talent.

Location

Costs of software engineering vary depending on the geographical location in which hiring takes place. Developers’ rates can vary significantly across different regions and countries due to factors such as the cost of living, labor costs, and market competition. Hiring developers from tech hubs or metropolitan areas, such as Silicon Valley, New York City, or London, often comes with higher salary expectations compared to hiring in less expensive regions or countries with lower labor costs.

Recruitment models 

There are various recruitment models available, including full-time employment, freelance or contract work, and outsourcing to third-party development agencies or offshore teams. Each model has its own cost structure and associated benefits. While hiring full-time employees typically involves higher upfront cost it can provide more control and long-term commitment. On the other hand, freelancers and offshore teams may offer more flexibility and cost savings, but impose challenges on project management and coordination

When it comes to cost-efficacy, in-house hiring vs IT outstaffing (also called IT staff augmentation) has become a subject for heated discussion among businesses. We’re going to compare the two recruitment models based on MEAN stack. This is a Javascript-based framework for building web applications. MEAN is named after the four key technologies that make up the stack, namely MongoDB, Express.js, Angular.js, Node.js.

Given the median yearly salary of MEAN developers of $120K, hiring them full-time may be costly. This number does not include additional labor costs such as bonuses, workplace organization, health insurance costs, tax payments, and more. Other expenses to consider are equipment and software expenses namely providing a laptop (PC), license, and software subscription.

On the other hand, what are MEAN software developer costs provided you adapt outstaffing model? Below is the table depicting the payscale of programmers depending on their experience level.

Let’s take a closer look at how much does it cost to hire a programmer with IT outstaffing. Our research indicates that the monthly expenditure for hiring a software developer through outstaffing varies between $4,320 and $8,000, depending on their level of experience. These rates prove to be substantial budget savers compared to the costs associated with recruiting an in-house software developer in the United States or Western Europe. 

Outstaffing offers an especially budget-friendly approach for companies aiming to rapidly and flexibly expand their development teams without the additional expenses related to in-house hiring. To be more precise, hiring software developers from offshore locations like Ukraine can result in 40% reduced overhead costs.

Another advantage of outstaffing is the avoidance of supplementary expenditures. Such expenses as workplace setup, health insurance fees, and taxes are typically covered by the outstaffing agency. Ultimately, engaging a software developer through IT outstaffing can be a financially efficient solution for companies seeking to streamline their development process while adhering to budget constraints.

Reduce time and costs in the search process

Recruiting agencies are the first idea that crosses the mind of business owners looking to attract competent software engineers. On the one hand, it may be the compelling choice to save time and effort on recruiting. On the other hand, not the best option when it comes to cost-savings since recruiting expenses typically vary from 15% to 30% of a candidate's initial annual salary.

To circumvent these expenses, an alternative option is to search for vetted programmers individually on platforms like Voypost Talent Pool. This platform enables you to search for developers based on more than 50 criteria. All developers available on the platform have undergone a rigorous selection process, which involves an HR assessment, a test assignment, and a technical interview to ensure their competence. By utilizing this platform, you can efficiently discover and hire mobile software developers within a timeframe of 3-14 days. This involves reviewing their profiles, conducting interviews, and selecting the most suitable candidate to meet your specific requirements.

Offshore developers

The COVID-19 pandemic has highlighted the effectiveness of remote work, eliminating the need for physical presence in traditional office settings. As a result, hiring remote developers has become a widespread practice in 2023, as companies have discovered significant cost reductions in their development processes. According to Verified Market Research, the Offshore Software Development Market was valued at USD 122,257.5 million in 2021, and it is projected to show a growth rate of 10.13% up to 2030 skyrocketing to 283,457.5 million. Ukraine, Poland, and Latvia have become the most thought-after destinations among US companies due to comparatively low labor expenses. In fact, hiring mobile software developers from countries like Ukraine can save almost half of the budget compared to hiring developers with similar skill sets from Western Europe or the United States.

IT Outstaffing

IT outstaffing is a viable option for companies, particularly startups, that need to develop software within a specific timeline, usually 4 to 12 months. In this case, in-house hiring will not only skyrocket the budget through long-term payment commitments but also impose additional challenges on recruiting process. Very few programmers would apply for a job knowing they’ll have to quit when the development process comes to an end. IT outstaffing offers a solution by providing pre-screened software developers for the duration of the project, eliminating the need for layoffs or payments for unused resources, equipping workplaces, covering the costs of health insurance, and maintaining tax compliance.

In conclusion, hiring software developers in 2023 requires careful consideration of factors that influence costs. In-house hiring can be expensive, including salaries, bonuses, and additional expenses. Alternatively, IT outstaffing offers cost-effective solutions, especially when hiring developers from offshore locations like Ukraine. Companies can reduce expenses and access a larger talent pool by utilizing platforms like Voypost Talent Pool and embracing remote work.